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Disinvestment in DPSUS – need for more of it

The primary objective of the government in setting up public undertakings was the prosperity of the nation and not making profits.  Disengaging the capital locked up in these undertakings and redeploying it in developmental projects would pay better social and economic dividends in the long run. Therefore, there is a need for evolving a sector-specific policy for disinvestment in DPSUs, which aims at making them more efficient and responsive to the needs of the armed forces.

In February 2017, the government raised Rs 1,600 crore through disinvestment of 5 per cent of the paid-up equity capital out of its share of 74.41 per cent in Bharat Electronic Limited (BEL). The enthusiastic response from investors, both institutional and retail, saw the issue being oversubscribed by 260 per cent. The enthusiasm of the retail investor far exceeded the interest shown by the domestic and foreign investors.

            BEL, a Navratna company is involved in manufacturing of radars and weapon systems, sonars, communication and electronic warfare systems, electro-optics and tank electronics. In the non-defence sector, its product range includes recently-much-in-the-news electronic voting machines, tablet PCs, integrated circuits, hybrid microcircuits, semiconductor devices and solar cells. The company is second only to Hindustan Aeronautics Limited (HAL) among all the DPSU in terms of profit earned since 2012-13. It is a close second to Goa Shipyard Limited (GSL) in terms of the value of exports. In 2015-16, it also exceeded the annual production target. These achievements are probably because BEL has consistently been the highest spender on R&D, even surpassing HAL. During 2016-17, it had spent 10.41 per cent of the total value of production on R&D till December 2016, which is more than the expenditure incurred by all other DPSUs, barring HAL which had spent 7.73 per cent.

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